The coastal regions are more competitive than those of the mountains

The difference always existed historically. The Peruvian coast had better competitive conditions than the mountains. This trend is shown in the latest regional competitiveness index (Incore-2023), prepared by the Peruvian Institute of Economy (Ipe). prevails Lime on the other regions and, later, they are located Moquegua, Tacna and Arequipa, then comes the north coast.

The Incore measures six competitive pillars: How is the economic environment, the quality of the infrastructure, health, education, labor and institutions. He Manager of Public Policies of Ipe, Víctor Fuentes Campos, identifies several reasons that explain the supremacy of the coast over the mountains.

In lagging areas there is a low level of investment, which prevents activating the virtuous circle of the economy: more production, better jobs and consequently a different quality of life for the inhabitants. In this struggle between the coast and the mountains, Apurímac has been the only region that has managed to get out of the last positions, the entry of the mining operations in The Bambas it became one of its engines.

The Incore ranking notes that, paradoxically, in several of the stagnant regions, tax revenues increased substantially as a result of extractive activities. However, that did not translate into better education, health or drinking water coverage, electricity and connectivity.

In conclusion, there was a lot of money, but it was used inefficiently, and several of these cases were associated with corruption. To cite an example, the regional government and municipalities of Cusco received generous allowances for mining and gas activity, but the quality of services is below the national average, only 66% of its population has access to these.

The case of Arequipa, there are also paradoxical data, it is in the top positions in the other pillars, but institutionally it is doing poorly. This is largely due to the inability to execute public budgets, for every 100 soles, they only spent 55 soles, between 2019 and 2022. A region without services is not attractive to invest, concludes Fuentes.

On the other hand, political instability and social conflicts, he adds, were other variables that helped close the pipe of private investment, key for Fuentes in the development of the country, for every five soles invested in the country, four are from private hands and one from public investment.

Small regions, the most powerful

tacna and moquegua They are the smallest departments in Peru, however, they are first in the ranking. For Víctor Fuentes, this is explained by his long relationship with mining. Southern Peru has been operating since the 1950s and recently quallaveco in Moquegua.

The presence of a large mine activates other sectors of the economy, provides better wages for workers, and also allows subnational governments to have more resources through canons and royalties. The pending subject continues to be the efficiency when using these resources. In addition, these two southern regions consistently, in the last decades, have the best performances in education.

Although, remember Fuentes, the ranking warns of a notable drop due to the pandemic. If before, 30% of schoolchildren evaluated understood what they read and adequately solved mathematical problems, today only 20% are in those capacities. That is attributed to the closure of schools in Peru during the pandemic, which has been the longest period in the world. Fuentes also points out that the teachers constituted another adverse element: a good part of them was not able to transmit virtual knowledge. This will affect labor productivity in the future, which was already one of the lowest compared to Latin American countries.

The specialist agrees that there are no public policies to close these gaps. Responsibilities are shared between the national government and the regional ones that have the powers of education and health. “We have dedicated ourselves more to responding to emergencies, to having one eye on the road and another in the abyss,” he adds.

Informality on the surface

Moquegua, Arequipa and Mother of God are the regions in which the monthly income from work is the highest than in the rest of the country. It is above 2,000 soles. What happened in Madre de Dios is explained by the presence of informal mining, confirms Fuentes. It is the confirmation that in the country, in labor matters, informality predominates. This trend has been seen with a greater incidence in the pandemic, where more than 77% work outside of labor regulations.